Debt Collectors in the E.R. and Delivery Room: Is Profit-Driven Medicine at a Breakpoint?

Imagine that you’ve brought your child to the emergency room and you’re revealing your most private health information to the hospital staff member at the desk, desperate because you fear your child’s very life is at risk. But the desk clerk seems more concerned about getting paid than giving care, and even makes veiled threats against your credit score if you’re not able to cough up the money to cover the bill.

Who is this heartless bureaucrat? Is it a hardened triage nurse? A bored clerk? Would you believe it could be a third-party bill collector posing as a hospital staffer?

Welcome to 21st-century American medicine. If you visit certain emergency rooms in Minnesota, Michigan or Utah — in at least 60 hospitals in the U.S. — the desk may be manned by bill collectors, who have been charged with getting patients to pay for care, sometimes even before they receive it.

Such bill collectors may also accost recovering surgical patients, demanding funds at their bedside. So far, there have been no reports that they’ve scrubbed into the operating room to collect money before anesthesia, but the allegations against medical debt collector Accretive Health revealed this week by Minnesota’s attorney general suggest that even that may not be beyond the pale.

The tactics, like embedding debt collectors as employees in emergency rooms and demanding that patients pay before receiving treatment, were outlined in hundreds of company documents released by the attorney general. And they cast a spotlight on the increasingly desperate strategies among hospitals to recoup payments as their unpaid debts mount.

To patients, the debt collectors may look indistinguishable from hospital employees, may demand they pay outstanding bills and may discourage them from seeking emergency care at all, even using scripts like those in collection boiler rooms, according to the documents and employees interviewed by The New York Times.

Employees of Fairview Health Services, a nonprofit chain of seven hospitals based in Minneapolis, were required to use a computer system derisively called “Blue Balls” to track whether patients paid their bills and push for payment before they received care, Minnesota Attorney General Lori Swanson said. The payment system began after Fairview hired the collection agency Accretive Health Inc. in May 2010, Swanson said in a report describing the companies’ relationship.

These tactics were allegedly used despite a federal law that requires hospitals to treat all emergency patients — regardless of their ability to pay. Responding to the allegations, Accretive said in a statement, “We have a great track record of helping hospitals enhance their quality of care. For example, we have helped over 250,000 patients get insurance coverage.”

According to company documents, Accretive’s bill collectors had access to patients’ health information, possibly in breach of federal privacy laws. The company’s employees may also have violated the law by failing to identify themselves to unknowing patients as collectors.

The Times reported that Accretive even targeted women in labor, saying that in July 2010 a manager urged staffers to “’get cracking on labor and delivery,’ since there is a ‘good chunk to be collected there,’ according to company e-mails.”

The alleged violations were first uncovered when an Accretive employee’s unencrypted laptop was stolen from a rental car parked in the Seven Corners bar and restaurant district in Minneapolis on July 25, 2011. The computer was found to contain personal identity information and medical records of nearly 23,500 patients of two Minnesota hospital systems — including highly sensitive data like HIV status, information about mental illnesses and social security numbers.

Minnesota Attorney General Swanson filed a civil lawsuit in January against the company for “failing to protect the confidentiality of patient health care records and not disclosing to patients its extensive involvement in their health care.” In a related press release, she said:

The debt collector found a way to essentially monetize portions of the revenue and health care delivery systems of some nonprofit hospitals for Wall Street investors, without the knowledge or consent of patients who have the right to know how their information is being used and to have it kept confidential. … Accretive showcases its activities to Wall Street investors but hides them from Minnesota patients.

Accretive Health is part of Accretive LLC, a private equity fund.

Is it at all surprising that Main Street continues to rage against Wall Street when it has shown such casual disregard for people’s lives, and when it pushes for profit while risking lives by reducing access to care? This sort of vulture capitalism is beyond unhealthy — it’s sick. Whether American health care can recover will depend on public pressure and outrage and on medical professionals recognizing that a health system that would allow a money-collecting company to bully its patients needs a complete moral and ethical detox — perhaps even a transplant.

Maia Szalavitz is a health writer for TIME.com. Find her on Twitter at @maiasz. You can also continue the discussion on TIME Healthland‘s Facebook page and on Twitter at @TIMEHealthland.